The charts of WestRock Inc. (WRK) show a bullish divergence between the price action and the momentum indicator. This divergence could be foreshadowing stable to higher prices in the weeks ahead. Let's check out the charts.
Jim Cramer discussed WestRock on his latest Action Alerts PLUS conference call. Click here to access the call and learn more about AAP.
In this daily bar chart of WRK, below, we can see a downtrend in place that has cut the share price of WRK in half the past twelve months. Prices are below the declining 50-day moving average line but we can see tests of that line in September, November and this month. The slower-to-react 200-day moving average line also has a bearish or negative slope. A bearish death cross of these two averages can be seen back in early June. Trading volume looks like it is heavier from October and could be a positive sign that aggressive sellers were met by aggressive buyers. The 12-day price momentum study in the lower panel shows a higher low from October to December while prices made a lower low. This is a bullish divergence and tells us that the pace of the decline slowed. A slower pace for a decline is a sign that buyers have come back to slow the decline. The daily On-Balance-Volume (OBV) line shows a decline to a December low and then a slight improvement. This should be watched for further gains.
In this weekly bar chart of WRK, below, we can see some light at the end of the tunnel. Yes prices are below the declining 40-week moving average line but the weekly OBV line looks like it has broken its downtrend from early 2018. The weekly MACD oscillator is ready to cross to the upside for a cover shorts buy signal.
In this Point and Figure chart of WRK, below, we have a nearby upside price target. You have to start somewhere.
Bottom line strategy: after being cut from $70 to $35 WRK needs to build a new base pattern. This may have just begun. More sideways price action is needed before the long side becomes more attractive.